NEWS ANALYSIS : Bush Using Aid to Put Leverage on Israel

By picking a rare public fight with Israel and its American supporters Thursday, President Bush displayed the depth of his opposition to Israeli policies in the occupied West Bank and Gaza Strip and sent a clear signal that he is prepared to use all the leverage at his disposal to bring about change.

The clear--albeit unstated--purpose of Bush’s demand for a four-month delay in congressional action on Israel’s request for $10 billion in loan guarantees is to keep the issue alive during the opening stages of a planned Middle East peace conference as a stark reminder to Israeli negotiators that it could be costly to defy Washington.

“It is a signal that you can’t have your cake and eat it too,” said Samuel W. Lewis, former U.S. ambassador to Israel. “They are not saying that, but I don’t think it’s incorrect to think that.”

Each President since Gerald R. Ford has had at least one well-publicized tiff with the Israeli government. In the past, the Israelis have usually prevailed, primarily because Jerusalem considers the issues to be matters of life and death, while Washington regards them as only one foreign policy concern among many.

It may work out that way again. But Middle East experts say that Bush is dead earnest in his opposition to the continued construction of Jewish settlements in the territories that Israel occupied during the 1967 Arab-Israeli War.

The loan-guarantee issue “is, indeed, usable leverage and he (Bush) will need some of that as the peace process goes along,” said William B. Quandt, a former National Security Council specialist on the Middle East.

Also, Quandt said, Bush and Israeli Prime Minister Yitzhak Shamir clearly rub each other the wrong way. This lack of personal rapport may make it more difficult to forge a compromise.

“Bush knows what they (Israeli officials) say about him behind his back--that he is anti-Semitic--and it genuinely gets to him,” added Quandt, now a senior fellow at the Brookings Institution in Washington.

Israel needs the $10 billion to house the influx of Soviet Jews who have poured into Israel since Moscow eased its emigration laws. The money would be borrowed from private banks with the U.S. government guaranteeing repayment.

Last year, the United States provided $400 million in housing loan guarantees after Israeli Foreign Minister David Levy pledged that none of the money would be spent in the West Bank or Gaza Strip. But Israel steadily accelerated its settlement activity in the occupied territories, an action that Washington considered a violation of the spirit, if not the letter, of Levy’s promise.

“The last go-around on loan guarantees left a very bad taste on the American side,” Quandt said. “They are determined not to be taken for fools again.”

Richard Murphy, formerly the State Department’s top Middle East strategist, said the loan legislation, set against the background of continued Israeli settlement activity, “puts the President in the position of being the big financier of the expansion of the settlements that he believes will destroy the peace process.”

In requesting the 120-day delay in consideration of the loan-guarantee legislation, Bush said his purpose was to head off a divisive debate that might damage the fragile peace conference, just when it was showing some promise. But his clear intention is to stop Congress from approving the guarantees, not just to preclude debate on the issue.

Bush’s own tough-talking press conference and the equally hard-edged response from Israel and its supporters have already produced the sort of controversy that the President said he wanted to avoid.